Don't Worry, The Bond Carnage Can Get A Lot Worse

The stock market has gotten boring, what with its incessant up moves day after day.

So instead the action has completely come back to the bond market, and boy what a story we've got going on there.

Here's a nice chart from Waverly Advisors showing how the trend has been broken and also just how much more we could fall if we start to undo the big multi-year bull market we've seen.

Here's three key points they observe:

This market has had an extended run up since mid 2007, for fundamental reasons that are both obvious and widely known. Due to the length of the uptrend, there is a lot of potential downside from these levels.

There have been a series of lower highs as the market has painted an extended triangle consolidation. In fact, the entire history back to January 2009 can be viewed in context of this large consolidation pattern. This market has had a clean series of higher lows. Even though the trendline seems to be losing its power to support the trend, we are not close to having an established trend change.